tag:blogger.com,1999:blog-27697009.post1872416186884518891..comments2024-02-29T03:21:35.007-08:00Comments on The Great Depression of 2006 : Hedge Fund Basics, No Handgun NeededJim in San Marcoshttp://www.blogger.com/profile/09435296419912935381noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-27697009.post-37300125915384165202007-09-16T13:58:00.000-07:002007-09-16T13:58:00.000-07:00Hi Anon 9:57The synthetic stuff is a real mind bog...Hi Anon 9:57<BR/><BR/>The synthetic stuff is a real mind boggler. It's a little like smokeless gunpowder, just as much damage,but its real clean.<BR/> <BR/>As for experts, I agree with you, there isn't much real experience, they are crawling out of the wood work. <BR/> <BR/> Another thing that hasn't been tested is the computer programs that run our market. In a down market, a programing error could bring the system down. I remember when computers first came out, there was no concern for dates past 1999 so they only used the last two digits. Just declaring a field size in a program as three digits wide would be OK if the field never exceeded 999. If the value hit 1000, you step into something unexpected. <BR/> <BR/>Any way you look at it, its a balancing act done without a net.Jim in San Marcoshttps://www.blogger.com/profile/09435296419912935381noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-79734205541819602332007-09-15T09:57:00.000-07:002007-09-15T09:57:00.000-07:00The option/insurance that you refer to on home loa...The option/insurance that you refer to on home loans is called a credit default swap and is sold on private exchanges. This market is the real overhang on all the markets. The size of it makes the US debt look small.The CDOs of today that everyone is talking about are constructed of these and are 100% synthetic.There are a lot of gray areas in this market. It is unregulated and there is no consensus on how it will function in a full blown crisis. If you look at the FED website at the experts they have working for them, you will not find one with "real" market experience in any market.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-27697009.post-70515303212241400632007-07-10T19:54:00.000-07:002007-07-10T19:54:00.000-07:00Hi DaveI think you are right, its kind of like lig...Hi Dave<BR/><BR/>I think you are right, its kind of like lighting a match to see if there is any gasoline left in the container.<BR/><BR/>There is about a one minute pause before you realize that most of the hair on your face is gone.<BR/><BR/>This could be the pause phase ....Jim in San Marcoshttps://www.blogger.com/profile/09435296419912935381noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-65583550765627104912007-07-10T12:51:00.000-07:002007-07-10T12:51:00.000-07:00Perfectly legal, yet in no sensible way is this me...Perfectly legal, yet in no sensible way is this method hedging for historic risk. When the liquidity flood is slowed to a trickle as lenders are crushed by defaults, all these long leveraged positions will unravel like the snap of a wet towel in the face. Right?Anonymoushttps://www.blogger.com/profile/07866213635857159755noreply@blogger.com